Not the Merriest Mortgage Season

Sorry, mortgage shoppers – you won’t find many Black Friday or Boxing Day deals on your home financing this month; the fixed cost of borrowing is inching higher along with bond yields, prompting lenders to cut their once-sizzling discounts.

While jolly economic conditions south of the border will likely prompt a U.S. rate rise, the cheer won’t extend to Canada’s central bank; slow economic recovery will hold the Bank of Canada at status quo until well into 2017.

Fixed Mortgage Rates: Up

Mortgage shoppers and renewals will encounter slightly higher fixed mortgage rates this month as lenders face rising costs and lower demand. The impending U.S. Federal Reserve rate rise has thrown fixed rate pricing into flux as investors dump their bonds, driving funding costs higher. And, as the winter market approaches, lenders are less competitive with their off-peak season pricing.

Variable Mortgage Rates: Unchanged

The latest GDP numbers may reflect a 2.3% growth in the third quarter, but it’s not enough to prompt the Bank of Canada to ease up on stimulus; in fact, the strongly anticipated U.S. rate rise later this month will likely depress the loonie further, taking the onus off the BoC to take further action. While economists aren’t ruling out the possibility of a 2016 rate cut, it’s not expected the central bank will be in a position to raise rates until 2017.

In its December interest rate announcement, the Bank states that growth remains in line with the MPR outlook, though sliding commodity prices challenge the resource and trade sectors. “The economy continues to undergo a complex and lengthy adjustment to the decline in Canada’s terms of trade,” states the BoC’s release, adding that “This adjustment is being aided by the ongoing US recovery, a lower Canadian dollar and the Bank’s monetary policy easing this year.”